Leadership styles for success in business

What makes a good leader?

It’s a question we’ve been asking ourselves for centuries, and it’s still fascinating us to this day. Since the 1800s philosophers, authors, politicians, entrepreneurs and cultural thinkers have been analysing this phenomenon and their theories continue to influence our modern workplaces.

This guide delves into the basics of leadership theory – noting key figures in the development of historical theories like Thomas Carlyle and James MacGregor Burns – and compares 5 different popular styles we still see in many modern workplaces.

A (very) brief introduction to popular leadership theories

To quote a 2015 study A Review of Leadership Theories, Principles and Styles and Their Relevance to Educational Management: ‘Leadership is arguably one of the most observed, yet least understood phenomena on earth.1 Sounds like a ludicrous overstatement, but when you stop and think about it, it’s true: we’ve been theorising about leadership for hundreds of years, and we’re still theorising today.

In the most general of terms, early schools of thought argued that leaders are born, not made. The famous Scottish writer Thomas Carlyle popularised this idea in the 1840s as the ‘Great Man Theory;’ he strongly believed in the importance of heroic leadership in defining history. According to the Great Man theory, a leader is a near-heroic figure who rises to a challenge and embraces his destiny when he’s needed most.

As is expected, Carlyle’s theory attracted many counterarguments, most notably from that of English philosopher Herbert Spencer. He found fault with Carlyle’s theory because he argued that leaders are the product of the societies that surround them, that social conditions influence behaviour rather than behaviour being something you’re born with.2

Fast-forward about 70 or so years: in the 1930s, German-American psychologist Kurt Lewin (thought to be the ‘founder of social psychology’) was one of the first academics to study group dynamics and he categorised management styles into three main categories: authoritarian, democratic and laissez-faire (see the Table of Contents for a more in-depth examination into these subcategories).

The ensuing decades saw a shift away from a trait-focussed theory toward a focus on the way a successful leader acts (the idea that effective leaders have different behaviours to ineffective ones), then on the situation that the leader is placed in (the situation determines whether the leader will be effective or not). Then, in 1978, American historian and political scientist James MacGregor Burns published Leadership, which became the basis for contemporary leadership theory because he was the first to define leadership as a social phenomenon that involves the followers as much as it does the leader3. In his book, he discusses the ideas of transactional leadership and transformational leadership, which will be defined in more detail later on in this guide.

Jump to now: our fascination with leadership is as relevant as ever. We have an endless supply of articles, videos, blog posts and speeches online around the subject, spearheaded by figures like author Simon Sinek (pictured) whose presentation ‘How Great Leaders Inspire Action’ is one of the most shared TED Talks of all time. Leaders come in all shapes and sizes, and our ever-present desire to learn more about it reflects its prominence in our culture.

An examination of the 5 common leadership styles

Authoritarian

Also known as autocratic, authoritarian leadership is defined by one person having total control over the activities of a group. The leader in an authoritarian leadership position dictates goals, procedures and participation of the entire group, meaning close supervision and little autonomy among employees.

Although it sounds a bit draconian, this style can be effective in certain circumstances. For example, during periods of change or restructuring it can be beneficial to have one strong voice to guide the rest, or in situations where mistakes could have dangerous consequences (like manufacturing or construction).

Democratic

This style, also known as participative, is based on collaboration between all members of a group. In a democratic leadership environment, everyone in the group is given the chance to participate and contribute ideas while the leader acts as a guide/mentor. This is one of the most popular styles of leadership as it encourages productivity and a higher group morale – the more invested and involved employees are in a project, the more they will care about the end result.

Laissez-faire

The term ‘laissez faire’ in French roughly translates to ‘let it/them do/make,’ but in a corporate context it basically means ‘let the employees make the decisions.’ In a laissez-faire leadership environment, the leader offers little guidance and gives the other group members the freedom to make their own decisions, solve their own problems and delegate where necessary.

Generally, this is considered one of the least productive styles as there are often too many different directions within the same group and workers may struggle to complete certain tasks without guidance. However, when employees have the skills to work independently, a slight laissez-faire approach could help them feel more in control and confident in their abilities.

Transactional

Introduced in Burns’ Leadership, this theory focusses on the relationship between the leader and the group. The leader promotes compliance and loyalty with their staff through a system of rewards and punishments based on performance. This style doesn’t focus on the future (i.e. changing procedures or introducing new goals); it instead focusses on ways to keep operations the same and running smoothly. This can be effective in a crisis or unexpected situation.

Transformational

Also a Burns’ idea, the aim of transformational leadership is to develop and empower employees so that they may become leaders themselves. A transformational leadership system is based around a culture of positive change between leaders and employees, where one is constantly motivating the other and vice versa. The idea is that a leader who is aligned with his/her workers will enhance overall productivity and performance.